Labour's answer to Cop28 climate vision gets pre-election rethink

Keir Starmer drops £28 billion green spending plan from party manifesto

Labour leader Keir Starmer is pledging to make Britain's power grid carbon-free by 2030. PA
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The Labour Party left the UAE last year full of save-the-planet spirit as it vowed to get to work on the ambitious climate goals set at Cop28 if it wins power in Britain this year.

But Labour’s tactical retreat this week on a £28 billion ($35.31 billion) green plan shows the pitfalls of turning the dreams of Dubai into reality in unforgiving political arenas back home.

Labour leader Keir Starmer has dropped a pledge to invest £28 billion a year in environmental policies, instead offering a more modest package of spending he hopes will act as a beacon for private funds.

Rachel Reeves, who as shadow chancellor is Labour's finance spokeswoman, said the decision was driven by changing economic circumstances meaning the party will face a "bleak inheritance" if it takes over the Treasury.

Ditching the annual £28 billion from the manifesto is meant to neutralise a favourite Conservative attack line, accusing Labour of reckless spending, before the election campaign heats up.

With Labour way ahead in the polls, policies are having their "tyres kicked" to test for weaknesses and phrases such as “borrowing splurge” being lobbed from the Conservative benches were deemed too much of a liability.

Green-minded voices in the party, mindful that the world will be watching whether rich countries such as Britain implement the pledges of Cop28, believe Labour still has a good story to tell on climate.

They hope Labour can stress the economic benefits of plans such as investing in battery production and green steel, even as it blames Tory mismanagement for limiting their financial scope. Ms Reeves said the package "remains our single biggest policy pledge".

But some fear the perception of a U-turn and a potential missed opportunity to address Britain’s energy security and cost-of-living issues will instead do more harm than good to Mr Starmer’s standing.

Labour has made extensive efforts to woo business but investors want certainty above all and some criticised Prime Minister Rishi Sunak for backtracking on green policies last year.

“There is certainly a bit of risk that Labour’s attempt to appeal to business could be dampened,” said Alasdair Johnstone of the Energy and Climate Intelligence Unit, a former adviser to Britain’s Cop26 presidency.

“When you poll the public and poll business, there’s a lot of support for some form of public investment from both groups.”

Green pledges

Labour’s green pitch now consists of:

· A £7.3 billion wealth fund to invest in technology such as green steel and gigafactories, where batteries are made for electric cars

· Plans to upgrade five million homes with a low energy-efficiency rating – revised down from 19 million – with an extra £6.6 billion for that purpose

· Making the electricity grid carbon-free by 2030, with a new publicly owned company called Great British Energy to be allocated £8.3 billion

· A new windfall tax on oil and gas companies, which it is hoped will raise £10.8 billion, with borrowing to cover the rest of Labour’s pledges

· No new licences for oil and gas, although existing North Sea drilling will be allowed to continue

The pledges add up to less than £24 billion across a whole four or five-year term, a huge cut from what could have been as much as £140 billion under the now-scrapped plan.

Warmer homes

Mr Starmer said the drive for warmer homes would be carried out “more slowly” than hoped, despite a global pledge to double the rate of energy-efficiency improvements by 2030 that emerged from Cop28.

A hostile briefing from the Treasury suggested Labour’s original warm-homes plan could cost up to £15 billion a year, although its figures were disputed and did not take account of possible health and economic benefits.

There are also questions over a lack of skilled workers to “go street by street”, installing elements such as loft insulation, heat pumps and solar panels as envisaged by Labour.

Juliet Phillips, a researcher at climate think tank E3G, said policy failures in Britain had “decimated the installer workforce”.

“Investment in warm homes is essential, as well as rebuilding supply chains and local authority capacity to deliver,” she said.

“We urge Labour to present an ambitious, realistic approach to rebuild confidence and turn around the government’s catastrophic track record.”

2025 deadline

If Labour wins the election expected in the second half of this year, it will have only a year or so to complete one of the main tasks set in Dubai.

Countries who signed the deal at Cop28 must hand in a new national climate plan by November 2025 that lives up to the global ambitions set out in the UAE.

These include transitioning from using fossil fuels, scaling up clean alternatives such as renewables, hydrogen and nuclear power, and phasing out inefficient fossil-fuel subsidies.

Labour’s shadow climate minister Ed Miliband has said the two years between the UAE-hosted summit and Cop30 in Brazil, expected to start on November 10, 2025, the deadline for the new plan, are the “decisive years of the decisive decade”.

Mr Miliband, who had championed the £28 billion pledge, fell in line with Mr Starmer’s caution this week as he insisted Labour would still govern with a “world-leading climate agenda”.

He said voters could choose between Labour’s plans and the “Conservatives slipping into climate denial”, after Mr Sunak’s climbdown on electric cars and gas boilers.

“The Conservatives' economic mismanagement and their scorched-earth policy have obviously made the fiscal situation far worse than envisaged,” Mr Miliband said.

Global race

With 194 countries signed up to the deal known as the UAE Consensus, there is concern that if Britain does not use the next few years to capture the economic gains of the green transition, others will.

Britain has done little so far to respond to US President Joe Biden’s vast $369 billion plan for green industry. One zero-emission van company, Arrival, has just gone into administration in the UK after pivoting production to the US.

Mr Miliband is also mindful of the UK's status on the international stage and has spoken, borrowing from former US president Bill Clinton, of impressing partners with “the power of our example”.

“There’s definitely that risk of the UK falling behind if there isn’t some kind of package,” Mr Johnstone said.

“Something to help keep those businesses and jobs in the UK is something that a lot of business leaders themselves are going to be looking for.”

Mr Starmer’s gambit came on what was deadline day for Labour’s shadow cabinet to hand in fully costed policy proposals they want to see in a manifesto.

Without the £28 billion tag no longer around its neck, the party’s task now is to win voters over to the green transition, said Ryan Jude, a Labour climate chief on Westminster City Council.

Labour’s policies are not only key to the green agenda but to another of its stated missions, of boosting Britain’s stagnant economic growth, he said.

“The need to explain details – sectors, outcomes and benefits that will be felt by voters, and how it will mobilise private capital – is now even more important,” he said.

Updated: February 09, 2024, 1:40 PM